February 12, 2012

An Odd Endorsement

It would be too much to ask for a George Romney today. But it would not be too much to ask for an agenda for economic and political reform that recaptured some of the most valuable elements of his career: an emphasis on compromise, a commitment to public education and the expansion of economic opportunity, a belief that workers deserve a voice and that a thriving capitalism must seek to align individual success with shared prosperity. This is certainly an example worth following.

As with all progressive policy pronouncements, one must ask what exactly does that mean. How does a thriving capitalism "align individual success with shared prosperity?" Turns out it's just a clever way of wording the same tired liberal remedies of higher taxes and more public spending.

But the elder Romney also saw government as a powerful tool for generating broad-based prosperity. Elected governor in 1962 after helping lead a commission that updated Michigan’s Constitution to reduce gridlock, he broke with conservative Republicans and worked across party lines to establish a minimum wage, introduce the income tax, grant collective bargaining rights to public employees, significantly increase state education spending and develop more generous programs for the poor and the unemployed.

So let's step back and take a look at Michigan now that it's had 50 years for those powerful tools for generating broad-based prosperity to take full effect. Google is such a marvelous resource for locating this kind of information. Consider this from the 4th Edition of the Alec-Laffer State Economic Competitive Index, Rich States, Poor States. I included the footnotes referenced in the excerpt.

The big winners in this interstate competition for jobs and growth have generally been the states in the South and West, such as Texas, Tennessee, Georgia, and Florida. The big losers have been in the Rust Belt regions of the Midwest. The demoralizing symptoms of economic despair in states like Michigan, Ohio, and Illinois include lost population, falling housing values, a shrinking tax base, business out-migration, capital flight, high unemployment rates, and less money for schools, roads, and aging infrastructure.

Escape from Detroit

In an announcement that shocked even those most attuned to the horrific problems facing Detroit, the U.S. Census Bureau recently reported that the Motor City has suffered a population loss of 25 percent in just the past 10 years, and now approximately only 700,000 people call Motown home.59 That is hardly enough for one congressional seat! It is hard to believe Detroit was home to nearly 2 million residents in 1950.60 While the city’s official unemployment rate hovers at a Great Depression level of 28 percent, there is recent evidence that fewer than 37 percent of Detroit’s residents are actually working.61 Little wonder that the city of Detroit recently announced plans to demolish 10,000 abandoned properties.62 This is just another big failure for big government.

Even worse for this laboratory of liberalism, a recent survey conducted by Detroit Regional News Hub and Intellitrends shows that one in three metro Detroit residents would like to leave.63 And why should they not? The city charges residents a 2.5 percent city income tax for the privilege of living within city limits.64 But that is not all: The revenue hungry city government actually imposes a tax on nonresidents who work in the city. In what is one of the worst ideas we can think of, the city levies a 1 percent corporate income tax for businesses located in the city. Did anyone ever tell the city’s policymakers capital is mobile? Of course it is very easy for capital to move between states, but it is even easier for profitable enterprises to avoid predatory local taxes.

Unsurprisingly, only 14 percent of residents in the Regional News Hub-Intellitrends survey “see the region as a good place to do business.” Alas, Motown’s anti-business philosophy has been ingrained for years. The “progressives” who have run the city government for decades are more concerned about preserving big government than about reigning in the costs of doing business within their borders.

The massive loss of jobs and human capital from this once great American city is truly appalling and should serve as a warning to states and cities across the country: Do not repeat the mistakes of the Motor City.

63 Oosting, Jonathan. “Study: Young People Hopeful for Metro Detroit, but 1 in 3 Residents Want to Leave.” MLive.com. April 21, 2010.

64 City of Detroit. Finance Department.

Jacob S. Hacker is the Stanley B. Resor Professor of Political Science at Yale University. Paul Pierson is the John Gross Professor of Political Science at the University of California at Berkeley. Professor Hacker was an early and enthusiastic advocate for ObamaCare, and although the final product fell short of his ideal, he was influential in its formulation.

Which emphasizes the importance the the fact that professors Hacker and Pierson are political science professors. Though they influence health care they are not a health care experts. They bring no medical expertise to the table, nor any expertise in medically related technology. Neither are they economists nor businessmen, which is something to keep in mind as they argue for particular economic policies. The expertise they bring to the discussions is in political science which is, according to The American Political Science Association, "the study of governments, public policies and political processes, systems, and political behavior."

The good professors give truth to the old saying, "To a carpenter with a hammer, every problem looks like a nail." Being credentialed by academia, their expertise is officially designated as authoritative. Theirs is a naturally symbiotic relationship with the progressive political world, which sees only a political solution to any problem.

But don't bother them with their unfortunate policy outcomes. Such as how Michigan has fared since Governor George Romney's policies, so favored by the professors, were imposed.

Progressives are in the business of imagining problems for the solutions they have in mind. For instance, a New York Times article from last year pointed out that the poorest in America are better off than roughly 68% of the rest of the world.

Notice how the entire line for the United States resides in the top portion of the graph? That’s because the entire country is relatively rich. In fact, America’s bottom ventile is still richer than most of the world: That is, the typical person in the bottom 5 percent of the American income distribution is still richer than 68 percent of the world’s inhabitants.

Since it is quite obvious that people can do better in America because it is a rich country, progressives have to find some other evil to attack. That would be the gap between the rich and the poor. It's not enough that the poor do better. The rich are too rich. In the three short years that Obama has been in office, he has been trying to solve that problem by making everyone worse off. He is determined to tax the rich at higher rates, even though it stifles job creation.

It's much the same as with ObamaCare. Leave it to progressives to take the most advanced system of medical care in the world and "fix it" with ObamaCare.

Has anyone noticed that progressives don't fix anything? As for Professors Hacker and Pierson, the solutions they espouse are not really suited to fixing economic or health care problems. Their expertise is in neither of those areas. Their science is politics and they play for the progressive team. Their solutions are aimed at putting power into the hands of progressives. They've been pretty successful at it.